More than two dozen plaintiffs filed
suit Tuesday against the managers of two Portland hedge fund companies and
their accountants, alleging they ran a Bernie Madoff-like Ponzi
scheme that defrauded investors of at least $5 million.

The lawsuit, filed in Multnomah County
Circuit Court, accuses former business partners Yusaf Jawed and Lyman
J. Bruhn of violating state securities laws while running a variety
of hedge funds under the names Sasquatch Capital and Grifphon Asset
Management.

It also accuses Portland accounting
firm Perkins & Co., former Perkins accountant Hoang Nguyen and
accountant Fred Williams of professional malpractice in reporting the
funds' results. Nguyen continued to work as the funds' accountant
after moving to a new firm, Holmes & Co., though that firm was
not named in the suit.

Jawed and Bruhn could not be reached
for comment. In an interview with The Oregonian last year, Jawed
denied wrongdoing and said at the time that he managed $63 million
for about 150 investors. Perkins representatives could not
immediately be reached on Tuesday.

Michael Esler, the Portland attorney
representing the investors, said some of them were alumni or donors
of Reed College, where the Pakistan-born Jawed earned a degree in
the early 1990s. Jawed and two Reed graduates he hired were featured
in the Autumn 2006 edition of the Portland college's alumni magazine
in a story titled "Hedging Reed's Bets."

"That seems to be the common nexus
Jawed played on in the community," Esler said. "That became
the door opener."

Hedge funds are largely unregulated
mutual funds for the rich. In 2010, Congress required greater
oversight of the largest hedge funds. But smaller funds remain exempt
from most public reporting, record-keeping and registration
requirements.

The suit alleges Bruhn and Jawed
persuaded mostly Oregonians to invest millions of dollars in their
"black box" hedge funds, with investments and holdings not
clearly described to investors. But instead of investing the money in
stand-alone funds, the duo commingled the investments and used the
money for their own purposes, the lawsuit alleges.

Beginning in late 2009, attorneys for
the funds told investors that the funds' assets had been sold and
that investors would be cashed out. Despite repeated reassurances
even recently, investors have not received their money, Esler said.

"Promises are being made that
funds are being forthcoming on very short deadlines and then it
doesn't happen," Esler said. "That's been going on for more
than a year and a half. It's got to be one of the most bizarre
situations I've seen in 40 years of doing these kind of things."

The lawsuit also alleges the pair's
accountants prepared misleading and false tax returns, financial
statements and income statements for investors. Those statements
prompted investors to make additional investments and keep their
money with the hedge fund managers longer than they would have
otherwise, the lawsuit alleges.

Also named in the lawsuit are Terence
Lo and Daniel Kloucek, who were officers and managers of some
Grifphon funds; Bruhn's wife Sheila Bruhn; and Jawed's former wife
Fernanda DeClercq, who was also a portfolio manager for the funds.